Singapore yield curve: did the 10-year minus 2-year SGS spread predict recessions?

An inverted yield curve, where short-term government bonds pay more than long-term ones, is widely quoted as a recession warning. Singapore’s curve inverted for most of 2023 and early 2024 and the economy kept growing. This note checks how the signal has done in Singapore since 1998.

What is the Singapore yield curve spread?

It is the 10-year SGS yield minus the 2-year SGS yield, measured at each month-end. Both come from the MAS series in SingStat table M700071. A positive number means investors receive more for lending for ten years than for two; a negative number is an inversion.

The 2-year tenor is used because it is the shortest government yield published in the same table. Some countries use 3-month bills, which gives different values.

Where is the spread now?

10-year minus 2-year SGS yield, end of August 2026 (2.35% minus 1.70%, MAS via SingStat)

Visual guide

Where is the spread now?

Spread

• August 2026+65 basis points
• Average since June 1998+113 basis points
• Median since June 1998+116 basis points
• Most inverted (December 2023)−55 basis points
• 30 September 2026, ADB daily (Bloomberg)about +48 basis points
• 7 October 2026, ADB daily (Bloomberg)about +52 basis points

-55275

Measure	Spread
August 2026	+65 basis points
Average since June 1998	+113 basis points
Median since June 1998	+116 basis points
Widest (November 2003)	+275 basis points
Most inverted (December 2023)	−55 basis points
30 September 2026, ADB daily (Bloomberg)	about +48 basis points
7 October 2026, ADB daily (Bloomberg)	about +52 basis points

The curve is positive but flatter than usual. In the twelve months to August 2026 the spread moved between 41 and 74 basis points.

Did a flat or inverted curve come before contractions?

Since June 1998 the curve was inverted (zero or below) in 22 of 339 month-ends. Three stretches spent at least three months below 20 basis points. The table compares them with the GDP record (seasonally adjusted quarter-on-quarter change, SingStat M015902).

Flat or inverted stretch	Lowest spread	What followed	Reading
October 2006 to February 2007 (5 months)	+4 bp	Four falling quarters, 2008Q2 to 2009Q1	Came first, but over a year early and the shock was global
August to October 2019 (3 months)	+7 bp	−0.1% in 2020Q1, −12.1% in 2020Q2	Contraction caused by the pandemic; treat as coincidence
November 2022 to February 2025 (28 months, inverted November 2022 to July 2024)	−55 bp	Only 2022Q4 at −0.1%	Miss: slowdown, no recession

The misses run the other way too. The 2001 recession, when year-on-year GDP fell as much as 4.9%, came after a steep curve: the spread was at least 115 basis points throughout 2000. Smaller falling quarters in 2010, 2011, 2012, 2015 and 2021 came in years when the spread never dropped below 68 basis points.

During the long inversion, year-on-year growth (SingStat M015631) dropped to 0.5% in 2023Q1 and 0.6% in 2023Q2, then rose to 4.3% to 7.0% through 2024. The curve picked up a slowdown, not a contraction.

Why did the US curve also miss?

The US 10-year minus 2-year spread (FRED T10Y2Y, monthly average) was inverted for 26 months, from July 2022 to August 2024. It was the longest inversion since the series began in 1976, and no US recession followed.

US 10-year minus 2-year inversion, July 2022 to August 2024 (FRED T10Y2Y, monthly average), longest since 1976, no recession

The two inversions overlapped almost exactly. That is not a coincidence: Singapore’s short-term rates move closely with US rates, so a sharp rise in US short yields tends to lift Singapore’s 2-year yield as well.

What do short yields say when there is no policy rate?

In most markets, comparing the 2-year yield with the policy rate shows whether investors expect cuts or hikes. Singapore has no policy rate. MAS steers the Singapore dollar exchange rate band instead, and in July 2026 raised its rate of appreciation very slightly.

As a result, the front end of the SGS curve mainly reflects US short-term rates, adjusted for the expected path of the Singapore dollar. A flattening of Singapore’s curve can therefore come from abroad, without any change in the domestic outlook. This is one reason the signal has a weaker record here than the textbook suggests.

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What are the limits of this check?

For the long end on its own, see where the 10-year yield stands in its own history.